AUG. 30, 2010 • Starting Nov. 1 Microsoft will raise the annual Xbox Live Gold subscription to $59.99 from $49.99. The move will make the previously announced Family Subscription a greater value. The Gold Family Pack will provide four Gold memberships for $99. In addition, existing Gold user will be able to roll their single subscription into the Gold Family Pack, The family plan includes a more family-friending dashboard, and content availability will be slightly different than with a standard Gold subscription.
Impact: From an overall perspective, Xbox Live has two main functions 1) selling digital content (DLC) and 2) allowing people to play games with others online. Anyone on Xbox Live can buy DLC, but the second function requires users to buy a subscription to Xbox Live Gold. Surprisingly it is only in the past year that sales from digital content purchases finally surpassed the revenues generated from the $50 annual Xbox Live Gold subscription.  Being able to play games online for free is a huge benefit for consumers and a major cost for operators. With Sony announcing its own premium subscription, Microsoft probably felt justified in raising the price. As for the Family Subscription, with the forthcoming Kinect and its initial focus on family content, Microsoft is looking for easy ways for families to not only play Kinect games online in multiplayer modes but also accept the idea of the Xbox 360 as a way to purchase all kinds of digital content.
